Unit 3 LOF

The money a company earns from selling its goods and services to customers is known as

• Sales revenue

• Cost of goods sold

• Inventory

• Gross profit

This includes all of the costs and expenses directly related to the production of goods. It excludes indirect costs such as overhead and sales & marketing. This is deducted from revenues (sales) in order to calculate gross profit.

• Sales revenue

• Cost of goods sold

• Inventory

• Gross profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.

• Sales revenue

• Cost of goods sold

• Inventory

• Gross profit

Gross profit is calculated by which formula?

• subtracting the revenue (sales) made from the cost of goods

• subtracting the cost of goods sold from the revenue (sales)

• multiplying revenue by sales price

• dividing revenue by sales price

This is the term for the goods available for sale and raw materials used to produce goods available for sale. This represents one of the most important assets of a business because the turnover of this represents one of the primary sources of revenue generation.

• Sales revenue

• Cost of goods sold

• Inventory

• Gross profit

Once a vehicle or a piece of equipment has been used it becomes second hand and loses value - this business term is called what?

• Net profit

• Inventory

• Expenses

• Depreciation

Once Gross profit has been calculated you then deduct all the business expenses from this, you then end up with your final figure which is known as?

Historic value - residual value / expected life

What's the name of this formula?

• Straight line depreciation

• Historic value formula

• The cost of an asset when it was first purchased

• Reducing balance

If a business has an excellent Gross Profit figure, however when the Net profit is worked out it hardly leaves any profit, what could a business do?

• Increase prices

• Change utility suppliers to get a better deal

• Reduce marketing and advertising expenses

• Review staff requirements

• All of these things

Everything a business owns = assets

Everything that a business owes = liabilities True or false?

• True

• False